Question: QUESTION 3 2 If a firm declares a 2 0 : 1 stock split, and the pre - split price was $ 5 0 0

QUESTION

32

If a firm declares a

20

1

stock split, and the pre

-

split price was $

500,

then we might expect the post

-

split price to be $

25 .

However, it often tums out that the post

-

split price will be higher than $

25 .

This higher price could be due to signaling effects investors believe that managentent split the stock because they think the firm is going to do better in the fiture. The higher price could also be because investors like lower

-

priced shares.

True

False

QUESTION 3 2 If a firm declares a 2 0 : 1 stock

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Stock split-Firm Growth Industries' current stockholders' equity account is as follows Preferred stock $ 400,000 Common stock (800,000 shares at $3 par) 2,400,000 Paid.in capital in excess of par...

need answers of 1 to 5. thanks in advance DIVIDEND POLICY 1) ABC Corporation has 1.3 million common shares outstanding and total earnings of $2.4 million. The firm paid dividends totaling $550,000....

1) ABC Corporation has 1.3 million common shares outstanding and total earnings of $2.4 million. The firm paid dividends totaling $550,000. The firm has no preferred stock. a) What were the dividends...

Help on worksheet Below is the stockholders' equity section of the Satchmo Company on December 31, 2021. Stockholders' Equities Common Stock (9,000 shares issued and outstanding) 500,000 Retained...

Answer each individual question. 1 Company A has a risk percentage of 55% and a return of 14%. Company B has a risk percentage of 3% and a return of 14%. Compute the Coefficient of Variation for each...

QUESTION 3 (25 MARKS) a. Anugerah Inc. Had completed a 5-for-1 stock split two days earlier. Stock is currently selling for RM20 per share. Three years back, the firm had a 2-for-1 split. Assume that...

You hold 600 shares of Motorhead Motorcycles and the firm declares a 3 for 2 stock split. How many shares do you have after the split and what is the new price if the pre-split price was $94.50 per...

A two-year $1,000 par zero-coupon bond is currently priced at $819.00. A two-year $1,000 annuity is currently priced at $1,712.52. If you want to invest $50,000 in one of the two securities, which is...

Design a DC battery charger for an electrical vehicle that has a 96 V (nominal) BLDC hub motor which is plugged directly from grid to EV. i) Which type(s) of diode circuit(s) is(are) used for this...

Blue Corporation has the following account balances at December 3 1 , 2 0 2 5 . \ table [ [ Common stock, $ 5 par value,$ 4 6 9 , 0 0 0

Can you elucidate the role of molecular chaperones and protein quality control systems in maintaining the integrity and homeostasis of the cytoplasm, particularly under conditions of cellular stress...